The Land Law 2024 introduces major amendments to the land use regime in Vietnam. One of the most interesting new amendments is the ability of a land user who lease land from the Government with annual rental payment (such user, Annual Land User) could now sub-lease or, subject to certain conditions, sell the land (via a sub-lease or sale of the lease rights) together with the assets attached to such land to another person. Previously, most land users who pay land rental for the whole term in advance could sublease or sell its land to another person. In our opinion, if implemented properly, the new amendment could improve the supply side of the real estate market substantially.

The Land Law 2024 defines the lease rights under a lease contract (quyền thuê trong hợp đồng thuê đất) (such rights, lease rights) is the rights of an Annual Land User which arises when the Government leases land with annual rental payment to such user. In particular,

• Sub-lease: an Annual Land User being a company including both domestic and foreign invested companies, or an individual could lease the assets attached to the relevant land and the lease rights to another person. The Land Law 2024 seems not to require the Annual Land User to satisfy any conditions when sub-leasing the relevant land and the assets attached to land. However, the law is not clear whether sub-leasing of the land without any assets attached to it is possible; and

• Sale: an Annual Land User being a company including both domestic and foreign invested companies or an individual could sell the assets attached to the relevant land and/or the lease rights to another person if (1) the relevant assets have been legally developed and registered in accordance with law, (2) the construction of the asset complies with the approved construction planning and the approved investment project, and (3) the Annual Land User has paid for the land clearance and compensation costs in advance and such advance costs has not been fully recovered through the deduction of land rental.

The purchaser of the lease rights and the assets attached to the relevant land will be entitled to:

• inherit the rights and obligations of a land user under the Land Law 2024;

• continue to use the land  for the remaining term and for the same purpose; and

• continue to offset the advanced land clearance and compensation costs against future land rental.

This update is written by Nguyen Quang Vu.